Strong demand buoys factory growth, PMI rises to 11-month high in November

Buoyed by a rise in domestic and foreign demand, India’s factory activity in November expanded at the fastest pace this year, a private survey showed on Monday.Kirtika Suneja | ET Bureau | December 03, 2018, 17:06 IST

New Delhi: Buoyed by a rise in domestic and foreign demand, India’s factory activity in November expanded at the fastest pace this year, a private survey showed on Monday.

The Nikkei Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, rose to 54 in November from October’s 53.1.

On the employment front, goods producers created jobs in November. A reading of over 50 on this survey-based index indicates expansion, below that contraction.

“Indian manufacturing sector continued to recover from ground lost in August, with November seeing the headline PMI climb to an 11-month high,” said Pollyanna De Lima, principal economist at IHS Markit and author of the report.

On the employment front, goods producers created jobs in November. Though the increase in employment softened slightly since October, but was among the fastest seen in six years, the survey noted.

Official data released last week showed India’s manufacturing growing 7.4% in the July-September quarter compared with 13.5% in the preceding quarter and 7.1% in the year earlier as a rise in input and energy costs along with rupee depreciation hit corporate margins.

This made the gross domestic product expanded 7.1% in the second quarter of FY19, down from 8.2% in the April-June period.

"Manufacturers further drew down their finished goods stocks to meet demand. This, coupled with improved business sentiment, should ensure that production continues to rise at a robust clip as we head towards 2019," Lima added.

In fact, segment leaders like Maruti Suzuki, Tata Motors and Hero MotoCorp have reported de-growth of 34.3 per cent, 45 per cent and 20 per cent, respectively giving a clear indication of a prolonged slowdown in the sector.